‘Price gouging’ and ‘pure greed’ in medical cannabis pricing
More and more people are turning to products such as CBD oil for their ailments. But many are finding it unaffordable and sometimes that’s because of large markups pharmacies are charging. National Correspondent Tony Wall reports.
Karen and Adam Jeffries got a shock when they saw the price on the box – $413 for a 25ml bottle of high-strength formulation Medleaf CBD oil.
They’d previously been using much more expensive cannabis products for their daughter, Zoe, who has cerebral palsy and other serious health problems, and had been told that Medleaf, imported from Europe by a Kiwi company, was much cheaper.
CBD oil has given Zoe, 12, a hugely improved quality of life, reducing her seizures and allowing her to sleep.
Karen rang Pharmacy 44 in downtown Rotorua and asked if the price could be reduced. She was told no.
‘‘I had so many battles I was dealing with at the time ... I thought, ‘OK, I’m just going to look around’.’’
That was in December last year – when the bottle ran out in February she went to another pharmacy and got exactly the same product for $245.
The owner of Pharmacy 44, Ian Edward, says the label saying $413 was an error – it was generated using the pharmacy’s standard software for calculating mark-ups, but staff had actually discounted the price. The actual price charged to the local DHB, which was funding Zoe’s medicine at that time through a charity, was $300, he says.
‘‘It was a silly mistake,’’ he says, adding that it was the first time his pharmacy had ordered the medicine.
The confusion around prices highlight a problem in the burgeoning medicinal cannabis market, where products can differ in price by hundreds of dollars.
Since the Medicinal Cannabis Scheme came into operation in April, the number of reported product packs supplied has skyrocketed from 1276 then to 2387 in September, an 87 per cent jump.
None of the products are made in New Zealand because no company has yet passed the Ministry of Health’s strict quality standards to obtain a licence to manufacture. That is expected to change in the coming months. Meanwhile, all medicinal cannabis is being imported by five companies with licences to do so.
A source in one medicinal cannabis company told the Sunday Star-Times they would typically add 50 per cent to the price they purchased it for overseas, the pharmacy wholesaler would add around 3-6 per cent and some pharmacies were adding anywhere between 50 and 100 per cent.
Because the products are unapproved medicines, they cannot by law be advertised so there is no transparency around pricing. And because the products are not Government-funded, pharmacists can charge what they like.
Some pharmacists are using their standard computer software to generate a retail price; others are charging a flat fee which is $10 to $20 above the wholesale price, on ‘‘compassionate’’ grounds.
Wholesale prices obtained from a variety of sources by the Star-Times varied widely. Prices may vary depending on the supplier, but generally the wholesale price of a 40ml bottle of Tilray, containing 100mg of CBD per millilitre, is about $433, including GST. A 40ml bottle of Endoca (150mg) is about $ 396, a 30ml bottle of Theraleaf (100mg) is about $229, a 25ml bottle of Medleaf (100mg) about $200 and a 30ml bottle of Eqalis (120mg) about $178.
Depending on the prescribed dosage, a bottle can last for a month or two.
To save money, many patients illegally import products via the internet – a bottle of CBD oil can be bought for about $100 – or turn to the illicit local market.
Edward, owner of Pharmacy 44, says it’s been difficult to work out a fair price.
‘‘It was a rare product for us to access in the first place, we were absolutely flying blind. You’ve got variable products coming on to the market, at variable prices for variable quantities, none of which have existed probably two years ago – everything’s changing. It creates confusion for everybody. The question from our industry’s point of view is, what is a reasonable price to put on to it – and there is no answer to that.’’
Pharmacy 44 was given a frowny face emoji on a new pharmacy pricing map on the Medical Cannabis Awareness NZ (MCANZ) website. But after the StarTimes’ inquiries, Edward promised to beat the price the Jeffries family was paying for Medleaf elsewhere.
‘‘I’ve been in this game for 50 years – my motive is about caring for people who are less fortunate than myself,’’ he says.
Karen Jeffries says she’s happy with the way things have turned out, but hopes medical cannabis prices will continue to drop. The family estimates they’ve spent $36,000 on cannabis products – most of it covered by donations and fundraising.
In Auckland, Dr Mark Hotu, of Green Doctors in Ponsonby, says some prices he’s seen for medicinal cannabis products in pharmacies have been ‘‘shocking’’.
He started investigating about a year ago when a patient from Rotorua said they had been charged $560 for a bottle of Tilray which generally retailed in Auckland for between $350 and $400.
‘‘ I thought, ‘ there’s obviously price gouging’, so I thought I would do my own research.’’
Outside Auckland, he says, prices for Tilray were much more expensive – more than $600 in Whanganui. He puts it down to ‘‘pure greed’’.
‘‘I mean, they don’t do that with anything else. The whole thing with unapproved medicines, you can’t advertise your prices ... I guess that kind of lends itself to be able to do a bit of price gouging.’’
Hotu says his clinic tries to keep cannabis product prices as low as possible,
with a small margin to cover costs.
Ben Latty, co-owner of Wellworks Pharmacy in Wellington, says he’s tried to take a ‘‘ positive approach’’ to medicinal cannabis, putting small margins on products so they are accessible. For example, he charges $230 for Medleaf CBD oil (100mg), which is a mark-up of about $20.
‘‘Some pharmacies are taking the p... in my view, and they’re going up to $300, $400.’’
He says adding a standard, computergenerated margin for expensive prescription medicines is not fair because it can add hundreds to the price.
‘‘There’s a few pharmacies out there, probably more than a few actually, that probably haven’t quite got their prices sorted, and are just letting the computer pick a random price.’’
Dr Waseem Alzaher is the founder of the Cannabis Clinic, which charges $290 for the 100mg Medleaf.
He accepts that price is higher than elsewhere, but says it’s about keeping the clinic viable while reducing barriers for patients as much as possible.
‘‘We like to think we offset the cost through... our consultation costs – our consultations start at $ 79 and that’s the cheapest in the country.’’
Debbie Brough, co-owner of McKenzie Pharmacy in Twizel, defends her pharmacy quoting $262 for a bottle of Eqalis, the cheapest of the CBD brands wholesaling for about $178 including GST.
She says there are extra costs associated with unapproved medicines, such as a ‘‘procurement fee’’.
‘‘We still have to pay our staff and pay our electricity, we can’t give it away. We’re not ripping people off, but we’re certainly putting a mark-up on, all businesses do that,’’ she says.
‘‘In pharmacy, you can’t talk about pricing because that’s against the Commerce Commission – we can’t all get together and say we’ll do a flat fee – you’re not allowed to do that.’’
Both bodies representing pharmacists – the Pharmaceutical Society and the Pharmacy Guild – declined to comment.
In a statement, the Ministry of Health reinforced the point about collusion.
‘‘The Commerce Commission does not support any businesses ... colluding on pricing. As a result, prices will vary between pharmacies,’’ the statement said.
‘‘ It is also worth considering that pharmacists must recover the cost of importing the medicine and other costs including the wholesaler mark-up, storage, packaging, delivering and the time in procuring and dispensing the product. Always ask your pharmacist about any possible fees.’’
Elizabeth Plant, a former president of the Pharmaceutical Society who is now chief medical officer for Bay of Plentybased Eqalis, says significant mark-ups are frustrating.
‘‘ Our primary concern is for the patient, who is often vulnerable, as these medicines are already very expensive,’’ she says.
‘‘Fortunately, we have been working with a number of pharmacies that don’t put a mark-up on the medical cannabis product and are just charging a dispensing fee.’’
Courtney Letica, chief executive of Medleaf, says while there are ‘‘random, rogue pharmacies out there that are trying to make a quick dollar’’, most he’s dealt with have been fair, adding about $30 to the wholesale price which ‘‘is acceptable from my end’’.
Letica says the biggest impediment is the Government’s quality standards being the toughest in the world and ‘‘we’re actually expecting prices to go up’’.
Jacinta Newport, co-chair of MCANZ, says patients report a wide variance in prices and she had paid $100 more for a product in Nelson than what was being charged at Wellworks in Wellington.
She says many patients are too sick to work and rely on Ministry of Social Development funding, if they can get it. While it is legal for pharmacists to charge whatever they like, Newport says compassion should come into it.
‘‘When it’s non-funded medication, pharmacists can show compassion, because quite often the people who are wanting this product, their own GP won’t prescribe it and they have no choice but to go to the Cannabis Clinic or the Green Doctor.’’
Newport wants Pharmac to fund the medicines, which would dramatically reduce the price.
Meanwhile, Karen Jeffries advises people to shop around.
‘‘It’s all very new, everyone’s still learning. My advice is to shop around, ask people in the community and on social media that may be using it... to see what they’re paying, so you’ve got a figure to compare with.’’
‘‘Some pharmacies are taking the p... in my view, and they’re going up to $300, $400.’’ Ben Latty